I like shopping in book stores. There’s something about wandering the aisles and waiting for a book to jump out at you that I can’t get shopping online. Unfortunately, whenever I compare the price of a book Amazon has every in-person store beat, often pricing their offerings 30%-50% lower (or around $10/book in my experience) even when I go to a large chain like Barnes and Noble.
How is it that Amazon is able to afford to offer the books so much cheaper and also support all of the infrastructure involved in shipping it to my doorstep compared with in-person stores?
That brick and mortar store is what’s expensive. They might be 6 Barnes and Nobles in a city. Each paying expensive rent, each has their own full inventory (expensive), full staff that idle (watch how many sales are processed in the time you’re there), etc.
Compare that to one cheap warehouse out in cheap land. Which can cover the entire western coast. One inventory, which turns over quickly. Doesn’t have to be displayed nicely, just leave them in boxes. Orders coming in all the time (it’s covering an entire coast remember) so staff doesn’t idle. It’s simply far more efficient.
I skimmed the other answers and most of that stuff came later. The fundamentals is that it’s a warehouse that’s more efficient.